Correlation Between UniCredit SpA and Nordea Bank
Can any of the company-specific risk be diversified away by investing in both UniCredit SpA and Nordea Bank at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining UniCredit SpA and Nordea Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UniCredit SpA ADR and Nordea Bank Abp, you can compare the effects of market volatilities on UniCredit SpA and Nordea Bank and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in UniCredit SpA with a short position of Nordea Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of UniCredit SpA and Nordea Bank.
Diversification Opportunities for UniCredit SpA and Nordea Bank
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between UniCredit and Nordea is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding UniCredit SpA ADR and Nordea Bank Abp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordea Bank Abp and UniCredit SpA is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on UniCredit SpA ADR are associated (or correlated) with Nordea Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordea Bank Abp has no effect on the direction of UniCredit SpA i.e., UniCredit SpA and Nordea Bank go up and down completely randomly.
Pair Corralation between UniCredit SpA and Nordea Bank
Assuming the 90 days horizon UniCredit SpA ADR is expected to generate 1.43 times more return on investment than Nordea Bank. However, UniCredit SpA is 1.43 times more volatile than Nordea Bank Abp. It trades about 0.0 of its potential returns per unit of risk. Nordea Bank Abp is currently generating about -0.04 per unit of risk. If you would invest 1,927 in UniCredit SpA ADR on August 29, 2024 and sell it today you would lose (41.00) from holding UniCredit SpA ADR or give up 2.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
UniCredit SpA ADR vs. Nordea Bank Abp
Performance |
| Timeline |
| UniCredit SpA ADR |
| Nordea Bank Abp |
UniCredit SpA and Nordea Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UniCredit SpA and Nordea Bank
The main advantage of trading using opposite UniCredit SpA and Nordea Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UniCredit SpA position performs unexpectedly, Nordea Bank can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Nordea Bank will offset losses from the drop in Nordea Bank's long position.| UniCredit SpA vs. Banco Do Brasil | UniCredit SpA vs. Societe Generale ADR | UniCredit SpA vs. BNP Paribas SA | UniCredit SpA vs. Credit Agricole SA |
| Nordea Bank vs. Israel Discount Bank | Nordea Bank vs. Baraboo Bancorporation | Nordea Bank vs. Danske Bank AS | Nordea Bank vs. Jyske Bank AS |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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